It’s a common phenomenon. The first time homebuyers have done all the right stuff. They’ve saved for a down payment, run their credit report, pre-qualified for the loan. You’ve shown them dozens of properties. Maybe hundreds. And yet. . . and yet. . . they are still not quite ready to make an offer.
What’s a Realtor to do?
First, you have to empathize with the emotions that are behind this behavior. The insecurity comes from several heavy duty what-ifs:
- What if we’re making a mistake?
- What if there’s something better out there?
- What if we don’t like our new neighbors/schools/commute?
- What if we are paying too much?
- What if we lose a job or have another baby?
These and many other issues are flying around in the buyers’ minds like a swarm of nervous bees. With all that noise, it’s impossible to have a conversation about possibilities. Your job is to reassure them enough to get that offer on paper. Here’s how:
- Review the numbers. Sit down with the buyers and go over their budget. Talk about homeowner’s insurance, utilities, maintenance, property taxes. Point out the benefits of the mortgage tax deduction. Discuss creative ways to reduce expenses in case of a real emergency, such as illness or job loss.
- Make a wish list. Many homebuyers, first time and otherwise, confuse their wants with their needs. They want a home theater. They need to be located in a great school district. They want room for a garden or a pool. They need a lot of storage space. Help them separate these things into two lists—need to have vs. nice to have. If you can zero in on properties with most or all of the need-to-haves and maybe one or two nice-to-haves, you’ll be moving them closer to the offer stage.
- Stop the surfing. First time buyers can become addicted to the Internet. They will be logging on 15 times a day, looking for any new listing that has popped up. Promise them that you will be their surfer and that you’ll call them immediately whenever a property that fits their profile hits the market. This strategy will save you, and your buyers, a lot of time and unnecessary phone calls.
- Hold a seminar. Even though you’ve probably had casual conversations about things like buyer’s vs. seller’s markets, interest rate trends, and other relevant topics, pulling it all together in one well organized meeting is very reassuring to first-timers. Some firms hold first-time homebuyer seminars regularly and invite all their clients or prospective clients. It’s good to have a deck of Power Point slides on your computer, so you can either present these concepts to a group, or easily go one-on-one with a buyer.
- Talk resale. When someone is contemplating buying for the first time, selling that very home is probably the last thing on their mind. But it shouldn’t be. When you are able to point out the resale potential of a property, it will go a long way toward reassuring nervous buyers that they will have options if they fall on hard times or outgrow the home due to changing family situations.
- Put it in writing. Assure your buyers that, once they have made a decision, you’ll protect them from losing their dream home by making sure everything is in writing and delivered promptly to the seller’s agent. Too many buyers have heard horror stories about telephone offers made and accepted, only to get there a day later with the paperwork and find that the seller has accepted another offer. Follow up and follow through and let your buyers know that you won’t be sending that bottle of champagne until everything is in order.
- Don’t hide the hidden fees. Novice buyers are often unhappily surprised when they come to closing and are faced with all kinds of costs they didn’t anticipate, such as appraisal fees, escrow fees, credit report fees, home inspection costs, prepaid taxes and insurance etc. etc. It’s enough to make a nervous buyer walk (or run) right out the door. Bring these items up ahead of time so there are no last minute meltdowns.
- Falling in love is NOT wonderful. There’s a flip side to all the nervousness that first time homebuyers experience, and that’s falling in love with a home. This brings about a bad case of blindness whereby the prospective buyer is unable to see the dripping water pipes, the leaky roof, the deteriorating porch steps. Keep a couple of DVDs on hand for these occasions— Blandings Builds His Dream House or The Money Pit usually work well.
Cold feet can be warmed up, as we have described. But buyer’s remorse a month from now or a year from now will haunt you in a dozen unpleasant ways. Don’t let it happen to you.
Whatever state of mind your first time buyers are in right now, these are ways of forwarding the action and getting them to reach a decision they will be happy with, both short and long term. And that’s what keeps clients coming back for more.